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Health Reform – House vs Sentate

March 26th, 2009 – Congress is getting ready to do battle with the Senate over whether a government run health plan will compete with private insurance companies or not. Senator Max Baucus, a Democrat from Montana, has committed to drafting a bipartisan bill, whereas the Congress seems more likely to favor the government run plan. It seems that both sides will ultimately have to hammer out a negotiated settlement in late 2009.

According to a Wall Street Journal article even some supporters of the government run plan privately say that that it may have to be dropped to get a deal done. President Obama also highlighted both the positives and the negatives of a government run plan at this Health Reform Forum, saying that the concerns needed to be addressed “partly because I assume it would be very hard to come out of committee otherwise.”

Proponents of the government run plan say it will provide needed competition to keep private insurance costs low. Opponents of the government run plan fear that the government plan could be artificially cheap, driving private sector insurers out of the market and providing a back door to a single payer system that the government wholly controls.

Personal Commentary: While few people are sympathetic to the insurance industry, the fact remains that well regulated competition in industry tends to produce better results than government run programs.

If the insurance industry were required to offer coverage to everyone regardless of pre-existing conditions in tandem with a mandate for health care for all Americans, then consumers would benefit from dramatically increased plan portability. Increase portability of plans would require that insurers compete on price and service in order to attract and retain clients. With these changes the free market can work to consumers’ benefit, delivering a choice of affordable health insurance products from a variety of companies all competing for the consumers’ business.

In this situation the government would regulate the insurance industry and focus its efforts on reducing the costs of health services, as without any question it is those underlying cost drivers that lead to increasing health insurance premiums.

Your comments are welcome! What do you think will be the outcome of the negotiations between the House and the Senate? Do you agree with the commentary or how do you think a single payer system would fair over the coming years? Do you think a single payer system would result in better or worse quality of health care services?

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